Lesson-5-National-Economy-and-Patrimony.pptx
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National Economy and Patrimony ARTICLE XII, SECTION 11 No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations...
National Economy and Patrimony ARTICLE XII, SECTION 11 No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by such citizens; nor shall such franchise, certificate, or authorization be exclusive in Section 11 character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires. The State shall encourage equity participation in public utilities by the general public. The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association must be citizens of the Philippines. Section 11. Proposed amendment No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by such citizens; nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires. The State shall encourage equity participation in public utilities by the general public. The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association must be citizens of the Philippines.. Section 11. FRANCHISES FOR PUBLIC UTILITIES Power to grant: 1. Congress may directly grant a legislative franchise; or 2. Power to grant franchises may be delegated to appropriate regulatory agencies and/or LGU’s Public utility 1. In order to be considered as a public utility, and thus subject to this provision, the undertaking must involve dealing directly with the public. 2. Thus, a Build-Operate-Transfer grantee is NOT a public utility. The BOT grantee merely constructs the utility, and it leases the same to the government. It is the government which operates the public utility (operation separate from ownership). To whom granted: 1. Filipino citizens or 2. Corporations or associations incorporated in the Philippines and at least 60% of the capital is owned by Filipino citizens. Terms and conditions: 1. Duration: Not more than 50 years 2. Franchise is NOT exclusive in character 3. Franchise is granted under the condition that it is subject to amendment, alteration, or repeal by Congress when the common good so requires. Participation of Foreign Investors 1. The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in its capital. 2. Foreigners cannot be appointed as the executive and managing officers because these positions are reserved for Filipino citizens. In the Gamboa vs Teves, the threshold issue before the Court was "whether the term 'capital' in Section 11, Article XII of the Constitution refers to the total common shares only or to the total outstanding capital stock (combined total of common and non-voting preferred shares) of PLDT, a public utility.“ In resolving this issue, the Court looked into PLDT's capital structure at the time and found the glaring anomaly in treating the total outstanding capital stock as a single class of shares. The Court showed how control and beneficial ownership of PLDT rest solely with the common shares, thus: x x x (1) foreigners own 64.27% of the common shares of PLDT, which class of shares exercises the sole right to vote in the election of directors, and thus exercise control over PLDT; (2) Filipinos own only 35.73% of PLDT's common shares, constituting a minority of the voting stock, and thus do not exercise control over PLDT: (3) preferred shares, 99.44% owned by Filipinos, have no voting rights; (4) preferred shares earn only 1/70 of the dividends that common shares earn; (5) preferred shares have twice the par value of common shares; and (6) preferred shares constitute 77.85% of the authorized capital stock of PLDT and common shares only 22.15%. This kind of ownership and control of a public utility is a mockery of the Constitution. Clearly, PLDT's capital structure then, where 64.27% of the common shares were in the hands of foreigners, warranted the Court's ruling that the term "capital" refers to shares of stock that can vote in the election of directors. The Court further stated that "in the present case (in the case of PLDT), [the term 'capital' refers] only to common shares, and not to the total outstanding capital stock." The dispositive portion of the Gamboa Decision reads: WHEREFORE, we PARTLY GRANT the petition and rule that the term "capital" in Section 11, Article XII of the 1987 Constitution refers only to shares of stock entitled to vote in the election of directors, and thus in the present case only to common shares, and not to the total outstanding capital stock (common and non-voting preferred shares). Respondent Chairperson of the Securities and Exchange Commission is DIRECTED to apply this definition of the tem1 "capital" in determining the extent of allowable foreign ownership in respondent Philippine Long Distance Telephone Company, and if there is a violation of Section 11, Article XII of the Constitution, to impose the appropriate sanctions under the law. x x x. Thus, if a corporation, engaged in a partially nationalized industry, issues a mixture of common and preferred non-voting shares, at least 60 percent of the common shares and at least 60 percent of the preferred non-voting shares must be owned by Filipinos. Of course, if a corporation issues only a single class of shares, at least 60 percent of such shares must necessarily be owned by Filipinos. In short, the 60-40 ownership requirement in favor of Filipino citizens must apply separately to each class of shares, whether common, preferred nonvoting, preferred voting or any other class of shares. Applying uniformly the 60-40 ownership requirement in favor of Filipino citizens to each class of shares, regardless of differences in voting rights, privileges and restrictions, guarantees effective Filipino control of public utilities, as mandated by the Constitution. Moreover, such uniform application to each class of shares insures that the "controlling interest" in public utilities always lies in the hands of Filipino citizens. x x x. On House Bill 78 or the proposed New Public Service Act On10 March 2020, the House, by a vote of 136-43 and one abstention, approved on third and final reading House Bill 78, or the proposed New Public Service Act The proposed law amends Commonwealth Act 146, or the Public Service Act, by creating a distinction between a “public utility,” which is covered by strict ownership and management restrictions in the Constitution, and a “public service,” which may be fully owned and managed by foreign corporations. Commonwealth Act 146 classifies transportation and telecommunications enterprises as public utilities. House Bill 78 redefines both enterprises under the term “public service.” In other words, House Bill 78 allows foreign corporations to fully own and manage transportation and telecommunications enterprises in the Philippines — vital industries affecting every Filipino today. Rep. Sharon Garin, chairman of the House Committee on Economic Affairs, said House Bill 78 will help improve the “deplorable state” of the public services in the country by allowing more foreign investments. House Minority Leader Bienvenido Amante Jr. opposed the bill for being both unconstitutional and anti-Filipino. Unfortunately, the term “public utility” is not categorically defined under the current Constitution. At the time the Constitution was ratified in February 1987, the legal definition of “public utility” was provided by Commonwealth Act 146. Under that law, transportation and telecommunications enterprises in the Philippines fall under the definition of “public utility.” If the Constitution intended to vest in Congress the unbridled power to define specific terms in the text of the Constitution, then the Constitution would have included in Section 11, Article XII the phrase “as may be defined by law” like it did in, for example, in Section 26, Article II (which prohibits political dynasties but leaves it to Congress to define the term). The newly amended and approved law Commonwealth Act No. 146, or the Public Service Act specifies that the law would allow full foreign ownership of businesses in select industries such as telecommunications, airlines, and railways. Some sectors, however, will remain restricted to full foreign equity such as public utility vehicles, water, electricity, petroleum pipelines, and seaports. What are the advantages and disadvantages of this law? Source: https://tribune.net.ph/index.php/2020/03/24/while -we-were-worrying National Economy and Patrimony ARTICLE XII, SECTION 17 Section 17. In times of national emergency, when the public interest so requires, the State may, during the emergency and under reasonable terms prescribed by it, temporarily take over or direct the operation of any privately-owned public utility or business affected with public interest. General Provisions ARTICLE XVI, SECTIONS 10 AND 11 Section 10. The State shall provide the policy environment for the full development of Filipino capability and the emergence of communication structures suitable to the needs and aspirations of the nation and the balanced flow of information into, out of, and across the country, in accordance with a policy that respects the freedom of speech and of the press. Section 11. (1) The ownership and management of mass media shall be limited to citizens of the Philippines, or to corporations, cooperatives or associations, wholly- owned and managed by such citizens. The Congress shall regulate or prohibit monopolies in commercial mass media when the public interest so requires. No combinations in restraint of trade or unfair competition therein shall be allowed. (2) The advertising industry is impressed with public interest, and shall be regulated by law for the protection of consumers and the promotion of the general welfare. Only Filipino citizens or corporations or associations at least seventy per centum of the capital of which is owned by such citizens shall be allowed to engage in the advertising industry. The participation of foreign investors in the governing body of entities in such industry shall be limited to their proportionate share in the capital thereof, and all the executive and managing officers of such entities must be citizens of the Philippines. Petitioners James Mark Terry L. Ridon (Rep. Ridon), a member of the House of Representatives and the Integrated Ridon vs AXN Bar of the Philippines (IBPJ and Atty. and FOX Jonas Julius Caesar N. Azura (Atty. Azura), also a member of the IBP, allege that the SEC effectively allowed AXN and FOX to engage as mass media and advertising entities despite being 99.99o/o controlled by aliens, thus, violating the constitutionally prescribed foreign ownership restrictions on nationalized industries. Fearing "that the direct but unwarranted competition of these foreign-owned corporations with legally existing domestic corporations, engaged in similar activities poses threats to the continuing viability of constitutionally protected domestic industries and employment of their thousands of workers," Rep. Ridon urged the House of Representatives "to investigate the state of compliance of the cable television industry, including CATV operators and programming content providers, with the nationality restrictions of the 1987 Constitution and other existing statutes." In their consolidated Comment, the SEC, the NTC and the MTRCB, through their counsel, the Office of the Solicitor General (OSG). disagree and pray for the dismissal of the petitions. AXN and FOX, in their Opposition and Comment/Opposition, similarly pray that the petitions be dismissed What is the issue? Amendments or Revisions ARTICLE XVII, SECTIONS 2 AND 3 SECTION 2. Amendments to this Constitution may likewise be directly proposed by the people through initiative upon a petition of at least twelve per centum of the total number of registered voters, of which every legislative district must be represented by at least three per centum of the registered voters therein. No amendment under this section shall be authorized within five years following the ratification of this Constitution nor oftener than once every five years thereafter. The Congress shall provide for the implementation of the exercise of this right. SECTION 3. The Congress may, by a vote of two-thirds of all its Members, call a constitutional convention, or by a majority vote of all its Members, submit to the electorate the question of calling such a convention. Any amendment under Section 2 hereof shall be valid when ratified by a majority of the votes cast in a plebiscite which shall be held not earlier than sixty days nor later than ninety days after the certification by the Commission on Elections of the sufficiency of the petition.
